Government delays plan to limit sales of subsidized fuel

President Susilo Bambang Yudhoyono postponed Monday a plan to limit public fuel consumption until further studies could be conducted to measure its effectiveness.

?The President told us not to hurry with imposing the program until we are sure the program will run accordingly to the plan,? Energy and Mineral Resources Minister Purnomo Yusgiantoro told reporters after a Cabinet meeting.

The Cabinet meeting was aimed at setting a date for the program and its customer base.

Purnomo said the President had required related agencies to institute several procedures before imposing the program, which would include a preliminary trial, a pilot project, evaluation, and a public awareness campaign.

?We are still preparing those procedures. That is why we cannot come up with an exact time for the program,? he said.

Under the program, the government will distribute a ?kerosene control card? to low-income households across the country with each household limited to 12.5 liters per month.

The government is also planning to distribute a smart card to limit consumption of subsidized fuel by motorists in Java and Bali. With the card, a car and a motorcycle can only consume 5 liters and 1 liters of fuel per day respectively.

With global oil prices hovering above US$90 per barrel, the state coffers are already being drained for fuel subsidies and electricity. The government was forced to double the subsidy for this year?s state budget revision to Rp 106.2 trillion (US$11.4 billion), up from Rp 45.87 trillion in the original 2008 state budget.

Assumptions for calculating the proposed subsidy are based on fuel consumption of 35.475 million kiloliters, global oil price of $83 per barrel, and an exchange rate of Rp 9,150 per U.S. dollar. (*)